Monday, April 19, 2021

Westpac internal probes identify thousands of more AML breaches

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Westpac has disclosed in its latest financial accounts that its internal investigations have revealed thousands more potential AML breaches, on top of the 23 million breaches alleged by AUSTRAC last November.

Last month, Westpac said it expects to pay a AUD 900 million (USD 580 million) penalty over AUSTRAC’s allegations, but that the actual penalty may be materially higher or lower than this amount.

According to Thomson Reuters Regulatory Intelligence’s Asia Pacific Manager Nathan Lynch, the fact that Westpac has been in discussions with AUSTRAC for many months over a potential settlement may indicate that the regulator could be seeking a penalty larger than AUD 900,000.

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“There is another wave of reporting failures coming, in addition to the 23 million IFTIs we already know about,” Lynch told ABC News. “Westpac has said it may have failed to report as many as 90,000 threshold transaction reports. These TTRs cover the obligation to report every cash transaction over AUD 10,000 to AUSTRAC.”

Westpac said in its interim financial results, released on Monday (4 May 2020):

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Westpac has identified deficiencies in certain systems and controls relevant to its obligation to file TTRs. This has, over a number of years, resulted in instances where the Group has failed to report TTRs, as well as instances where the Group filed TTRs with incomplete or inaccurate information.

The Group has self-reported these TTR deficiencies to AUSTRAC and is keeping AUSTRAC apprised of the status of its investigations. To date, the remediation has involved the late reporting of 17,870 TTRs to AUSTRAC. Additionally, there are multiple TTR reporting scenarios which based on the preliminary analysis undertaken to date (which has not been finally quantified or resolved), could amount to an estimated 60,000 to 90,000 TTRs that have not been reported to AUSTRAC.

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In 2018, CBA (Commonwealth Bank of Australia) was penalised a record-breaking AUD 700 million for (among others) its failure to provide 53,506 TTRs to AUSTRAC on time for cash transactions over AUD 10,000 deposited through its ‘intelligent deposit machines’.

“The latest disclosures indicate that the problems at Westpac run deeper than AUSTRAC had initially suspected,” Lynch said. “As with the Commonwealth Bank case, this could open the door to a revised claim from the regulator, with new allegations.”

In addition, Westpac has identified new potential problems with its global tax reporting obligations under FATCA and CRS (Common Reporting Standards), which it has been working with the ATO (Australian Tax Office) to fix.

Westpac said:

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As part of the Group’s work to rectify its management of financial crime risks, the Group is also working to remediate gaps and enhance controls to support compliance with its FATCA and CRS obligations. The Group has been engaging with the Australian Tax Office (ATO) on its CRS remediation program and will continue to engage with the ATO on further programs of work.

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Original article on regulationasia

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